Green light for Kia mini-car ‘just a matter of time’ as Australia battles for supply

KIA Motors Australia is confident it will secure the new-generation Picanto micro-car for sale in Australia in 2012.

Vehicle supply appears to be the only sticking point for the Australian subsidiary, which is still in negotiations with its South Korean parent for production allocations across its entire range for next year – a decision on which will be finalised in the final quarter.

Kia Motors Australia chief operating officer Tony Barlow told GoAuto at last week’s Australian International Motor Show that he believed it was “just a matter of time” before the green light is given for the all-new Picanto, which was first unveiled in Geneva in March and is now on sale in Europe and the UK.

“We’re still working on it, still talking with Korea. There’s no decision on it but we’re very hopeful of getting it on the product line-up,” he said.

“I personally think it’s just a matter of time, getting the production, of course. Once again, it’s a very popular model around the world, so we put our hand up for it last year – and that’s really late in the cycle to get it from this model launch – so we’re battling, we speak about it every week, we’ve done numerous submissions and I think the need is very clear in Korea.” Mr Barlow said that there was no sticking point with the factory over price points for the new Picanto, which would be positioned below the forthcoming circa-$15,500 three-door version of the new-generation Rio light car due on sale here early next year, following the five-door’s launch next month.

While he admitted that the company was looking “very closely” at the influx of cheaper Chinese-built light cars on to the Australian market, Mr Barlow said the Kia brand was now in a different league and that Picanto – as with the new Rio – would be not be measured on price alone.

“We’ve moved away from just determining the vehicle entry points by price,” he said. “It’s more about the brand and where the brand is going to go.

“We are looking at our position in the market overall, and the determining factor (for Picanto) will not be on price – it will be whether we can get the model volume to be able to accommodate the market properly.” Mr Barlow said Kia Australia had to factor in significant launch costs and other expenses against vehicle allocations.

“But certainly the need is very clear to the Koreans,” he said, adding that discussions with Korea were also centring on where the light and sub-light market segments were heading in Australia.

“The discussions are really centring on looking at what the B segment is doing, the A segment as well, and we’re doing some forecasting on that – looking at where that might go over the next couple of years – and that’s really where we are up to with them (Korea) at this point in time,” he said.

The new Picanto – which GoAuto will drive later this year – is available in Europe in five-door and three-door body styles, with a choice of three ‘Kappa’ dual-CVVT petrol engines: a 62.5kW/121Nm 1.2-litre four-cylinder, a 51kW/95Nm 1.0-litre three-cylinder and a bi-fuel (petrol/LPG) version of the latter producing 60kW/94Nm.

All engines are combined with a five-speed manual gearbox, while a four-speed automatic is available as an option on the 1.2-litre inline four – the likely powertrain for our market, which is capable of excellent combined-cycle fuel economy of 4.5L/100km and CO2 emissions as low as 100g/km when fitted with idle-stop. Without, it still produces only 105g/km, according to European figures.

Significantly, the new Picanto is fitted in Europe with a high level of safety equipment including up to seven airbags (including a driver’s knee airbag), electronic stability control, ABS with EBD and brake assist, hill-start assist, four-wheel disc brakes and anti-whiplash front head restraints.

As GoAuto has reported, Kia is working to achieve five per cent sales growth this year, which would take its volume past 25,000 for only the second time in Australia – from a high of 25,293 in 2005.

Kia says demand is outstripping supply, which in turn has forced it to request more supplies from its Korean parent.

Mr Barlow said last week that the company had supply locked in for the remainder of this year and that next year the company was working on further incremental growth to 30,000-plus units.

“We’re tracking to where we’ve set our targets and we’ve got supply mapped out until the end of the year,” he said. “We have some scope for ‘flex up’ but we’re just battling against other countries at the moment to get production directed our way.

“The phenomenal growth that we’ve been through in the last two years is really setting up that pressure on production. Twenty per cent increases year-on-year on a global basis for two years in a row, that’s obviously going to put a strain on capacity.

“So we have to win the production. We have a plan that’s mapped out and it will give us what we believe to be the right market share for us this year and we’ll continue to push for higher production next year.

“I think in 2012 we’ll have to be over 30,000 units, for sure.” As well as Picanto and the new Rio variants – namely three-door and sedan – Kia Australia’s 2012 model rollout could, according to Mr Barlow, include the new-generation Cerato, although launch timing might blow out to early 2013.

He also said that new variants of the mid-sized Optima launched earlier this year, including a 2.0-litre engine, would not be seen before 2012.

“We have to look at the new 2.0-litre when it becomes available,” he said. “We have to basically have a look as to whether or not that’s going to be a fleet car and whether or not we are going to be focusing on getting it into not only business fleets but governments as well.”